State of the Territory: Bryan Talks About V.I.’s ‘Distressed’ Financial Picture

Gov. Albert Bryan Jr. delivers his first State of the Territory address. (Photo by Barry Leerdam)
Gov. Albert Bryan Jr. delivers his first State of the Territory address. (Photo by Barry Leerdam)

In his first State of the Territory address, Gov. Albert Bryan Jr. didn’t sugarcoat the details of a government he described as financially “distressed,” but he was specific in his plans for building new structures, task forces, and digital platforms that would bring about the “change” he and Lt. Gov. Tregenza Roach campaigned on.

Most importantly, Bryan confronted what he said were systemic causes to several community issues. Dealing with crime means tackling poverty, fixing the economy means rebuilding industries that will push the Virgin Islands ahead, and enacting education reform means partnering with multiple agencies including the University of the Virgin Islands and V.I. Labor Department, agencies that can work together to build a system that can take children from preschool through their first years in the workforce.

The complete text of the governor’s State of the Territory address is available by clicking this link: 2019 SOTTA FINAL

In speaking about finding new avenues for juvenile delinquency prevention, Bryan said it’s important to preserve the integrity of the Attorney General’s Office. His administration has sent a proposal to the Legislature to allow the territory’s attorney general to be appointed for a six-year term and allow the person serving in the position to be removed only for cause.

Bryan also spoke about creating a new digital module for monitoring and identifying federal grants. Throughout the ongoing storm recovery process, the territory has had access to billions in federal dollars, but hasn’t been able to use all of it by specified deadlines. Bryan said the electronic system would identify grants that are under-performing, and staff will be added to the government’s federal grants division to develop and issue a uniform grants management policy across the departments and agencies.

Meanwhile, a Vision 2040 Taskforce has been established under the Economic Development Authority (EDA) to develop an economic vision for the Virgin Islands 20 years into the future. Right now, the panel’s members include the Governor’s Office, Lieutenant Governor’s Office, and a variety of other agencies and private sector partners.

“By Oct. 1, the 20-year vision will have been developed and ready to be deployed,” Bryan said.

And in some cases, such as the Government Employees’ Retirement System, action needs to be immediate. With a $5 billion unfunded liability looming, Bryan said Monday that the government has simply “run out of road.” Similar language was used to describe some of the government’s more basic systems: waste management, health care and roads.

“These are the essentials for driving economic growth … as we move to attract visitors and investment, we have to ensure that the first impression is impressive and lasting and delivers the confidence in our government, the people and our territory,” Bryan said.

In the wake of two Category 5 hurricanes, the V.I. government had access to billions in federal dollars to address recovery and rebuilding efforts and in his address Monday, Bryan made it clear that without those funds, the government would have not been able to operate over the past year.

General fund revenues fell “drastically” after the storms, creating severe cashflow shortages for the government, which exacerbated an already growing structural budget deficit. According to reports from the previous administration, that deficit ranges from $250-$450 million, he said.

“We have borrowed $212 billion, and unfortunately, we can’t borrow any more. To compound our problems, the government … currently has no access to the capital markets. With minimal cash reserves on hand and no access to additional credit, government expenditures must be funded by ongoing revenue collection on a pay-as-you-go basis,” Bryan said.

The government has also accumulated nearly $270 million in outstanding obligations to vendors, along with unpaid income taxes to residents and $150 million in unpaid employer contributions to GERS.

“None of which can be paid in full,” he said.

Adding to the strain was the passage of the federal Tax Cuts and obs Act of 2017, which Bryan said threatens to reduce income tax collection rates to the V.I. government by approximately $64 million annually. A current court injunction in excise tax collections places in jeopardy another $40 million in tax collections, Bryan said.

“The federal recovery dollars have masked the true weakness of our economy,” he said. “While the disaster recovery spending will cushion the blow in the near term, if left unattended, the instability of the economy will become increasingly more evident when the recovery efforts subside in the coming years. The window to restart our private sector economy to avert fiscal collapse is very small, and it is closing rapidly.”

After talking about fixing GERS for the past 20 years, it’s finally time for the government to do it, Bryan said. While he did give a background of the pension system’s road to insolvency, Bryan said immediately his administration will seek to restructure the existing plan for retirees that will also preserve benefits for future generations.

Bryan spoke afterward about the state of the territory’s health care system, and mentioned that he had signed into law last week a medicinal marijuana bill that he said has raised some public concern, but has large economic benefits that he also said “should be realized in full.”

Regulating the industry properly is the first step, followed by the creation of the comprehensive health care strategy that addresses what’s needed locally, while also giving us the room to expand once the economy grows. Finally, moving all hospitals under one governing board will reinforce and set policies across the board, he said.

The governor also proposed:

– Refining the government procurement system by digitizing the processes across the board for both internal and external customers. This will help push projects forward, address issues with vendor payments and get contracts through on time.

– Having the Justice and Police departments work alongside federal agencies to solve crimes from beginning to end, instituting more rehabilitation and deterrence programs, along with vocational training and activating the “long dormant policy– making function” of the Law Enforcement Planning Commission to collect data and create programs for crime prevention.

– Addressing poverty by launching life skills programs (savings and asset building, financial literacy, and entrepreneurship, among them) and increasing access to career and training opportunities for at– risk communities.

– Working with and not against the V.I. Water and Power Authority to address revenue streams, while also looking at how to use waste to power our energy systems.

– Working with the Public Services Commission to restructure and stabilize the Waste Management Authority.

– Working with the EDA to bring in new investment in services, technology, energy, agriculture and manufacturing (STEAM).

“The U.S. Virgin Islands is America’s Business Paradise and our best days are yet to come,” Bryan said.